Myths and legends abound when it comes to notice of termination. To name just a few:
- Once notice is given, it can be withdrawn;
- An employer has to accept a resignation for it to be valid;
- The period of notice is the pay period.
We expunge some of these myths.
What is notice?
Notice is the period of time contractually required to be given to terminate an employment agreement. Notice is commonly two weeks, four weeks, or a month but can be any agreed period. Employers and employees must give, at a minimum, the requisite notice period to lawfully bring employment to an end.
In most cases notice will be provided for in a written employment agreement. Most written employment agreements also require notice to be given in writing to avoid any doubt as to an employer’s or an employee’s intention.
However, the absence of a written agreement or written notice clause does not remove the obligation on either employee or employer to give notice.
Not all employment agreements are in writing (despite the Employment Relations Act 2000 requiring employment agreements to be in writing). Further, some written employment agreements do not specify a period of notice. In those circumstances “reasonable notice” is required. Reasonable notice can take into account length of service, seniority of the position, what similar employment agreements require, and sometimes the particular circumstances of the termination.
What is Not Notice?
Intention to resign
Employers beware: an intention to resign is not notice. It is simply advice that an employee intends to resign at some point in the future (whether specific or not). If there is any doubt, ask the employee to clarify their intentions, and if they are wanting to give notice of resignation, ask for them to put it in writing.
Bad notice is no notice
A failure to give the correct period of contractual notice specified within an employment agreement or failure to give reasonable notice means that notice has not been given at all. Adding the shortfall between the amount given and the amount required does not cure the issue: notice has not been legally effected and can only be remedied by giving new notice for the correct period.
Many employment agreements permit notice to be truncated by the ‘paying in lieu of notice’ of the remainder of the period.
Payment in Lieu of Notice
Often an employment agreement will allow an employer to pay an amount instead of notice: this is commonly referred to as paying in lieu of notice. In these circumstances an employer exercising that right will terminate employment prior to the expiry of the notice period by making such payment, i.e. it is in lieu of or ‘instead of’ actual notice. An employer is only able to pay in lieu if the employment agreement provides for it, or if the employer and employee agree.
If there is no contractual ability to make a payment in lieu of notice, and an employer gives less than the required amount of notice, then it has not given notice at all (see “Bad notice is no notice” above).
An employer does not have an option of accepting an employee’s resignation or not. Once notice is given the dye is cast and employment will terminate unless both the employer and employee agree to a variation.
Furthermore, it is not possible for an employee, or for that matter an employer, to withdraw notice once it has been given. Either party giving notice has exercised a contractual right that brings to employment to an end. That notice cannot then be unilaterally withdrawn. If the parties wish their employment to continue, the employment agreement will need to be varied by an agreement to rescind the notice.
It is an urban myth that the notice period is the pay period. The pay period, and frequency of pay, has nothing to do with the period of notice. If the pay period and the period of notice are the same, that is contractual coincidence. It is not the law.